Brazil's leaders should worry less about public approval, focus on unpopular reforms that can move country forward, former Brazilian President Fernando Henrique Cardoso tells investment summit

Cindy Allen

Cindy Allen

May 21, 2013 – Thomson Reuters Corp.

SAO PAULO , May 21, 2013 () – Brazil's government needs to worry less about its high approval ratings and focus instead on reforms that, while unpopular, could bring the country out of its recent rut of subpar growth, former President Fernando Henrique Cardoso said on Monday.

Speaking at Reuters Latin America Investment Summit, Cardoso blamed politicians' "excessive confidence" in the status quo for economic growth that averaged just 1.8 percent the last two years, a period that saw Brazil fall out of favor as a hot spot for foreign capital.

Cardoso, who was president from 1995 to 2002 and remains an influential voice in the opposition PSDB party at the age of 81, said labor and tax reforms could get Latin America's biggest economy back on track but that President Dilma Rousseff has not shown the courage or skill needed to push them through Congress.

"Brazil didn't continue on the road of reform," Cardoso said. "There was a kind of excessive confidence that the impetus given by (financial) stability and by the world ... were sufficient to ensure well-being forever."

Rousseff, a pragmatic leftist, is one of the world's most popular leaders with an approval rating near 80 percent thanks largely to unemployment that has stayed at record lows despite the anemic economic growth.

She is a strong favorite to win re-election next year over candidates including the PSDB's Aecio Neves, a senator from Minas Gerais state who has Cardoso's strong backing.

Cardoso said Rousseff needs to be willing to spend more of her political capital in pressing for reforms. He cited changes to labor laws that carry some of the world's most generous benefits and protections, but also contribute to high production costs that make many local industries uncompetitive.

Such reforms require "an enormous effort by the president and the government and it takes its toll, you lose popularity," Cardoso said.

He knows from experience: Cardoso privatized state-run companies and made other tough reforms to end hyperinflation in the 1990s. That period helped pave the way for Brazil's recent prosperity, but left a sour taste with voters and the PSDB has not won the presidency since Cardoso left office.

In fairness, Rousseff has not exactly stood still. She has undertaken several politically difficult initiatives, including the privatization of some airports and highways, a push to lower Brazil's interest rates, and a contentious bill that passed Congress last week and opens up state-owned ports to badly needed private investment.

Economists expect those changes will help yield better economic growth of about 3 percent this year, compared with 0.9 percent last year. (Additional reporting by Bruno Federowski; Editing by Kieran Murray and Chris Reese)

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